Data communications networks are widespread in the United States. Many types of messages and transactions are sent through such networks, including electronic mail, news stories, and financial transactions.
Some data networks provide mechanisms for transmitting payment information from a merchant to a financial institution and vice versa. These networks are sometimes referred to as payment processing networks.
Payment processing networks are generally highly reliable, secure, and fast. Point of sale (POS) terminals coupled to such payment processing networks are generally widely available at merchants and other locations.
While ubiquitous in mainstream commerce, payment processing networks have so far not enjoyed widespread use in certain specialized fields, for example the healthcare industry. Specifically, it is estimated that every year there occur eight billion healthcare payment transactions representing roughly US $1.4 trillion.
FIG. 1 is a schematic diagram illustrating a simplified view of conventional payment processing in the healthcare field. Specifically, FIG. 1 shows the conventional series of payment processing interactions 100 occurring between a healthcare payer 101, healthcare provider 102, and a financial institution 104 of the healthcare provider. Examples of healthcare payers 100 include insurance companies. Examples of healthcare providers 102 include hospitals, doctor's offices, and pharmacies. Examples of financial institutions 104 include banks. For purposes of this patent application, the terms “payer” and “payor” are used interchangeably.
FIG. 1 shows the series of steps involved in conventional healthcare payment processing. Once a patient has visited healthcare provider 102, in a first step 110 the provider submits, typically by form mailed to payer 101, a healthcare claim in compliance with §837 of the Health Insurance Portability and Accountability Act (HIPAA). Enacted in 1996, HIPAA sets forth requirements addressing the security and privacy of health data.
Payer 101 receives the healthcare claim, and reviews it for eligibility to for payment under existing agreements with the patient and with the healthcare provider. Based upon the results of this review, in step 112 payer 101 returns to the healthcare provider 102 an Explanation of Benefits (EOB), indicating the amount to be paid (if any) by payer 101 for the medical services or products rendered to the patient by the healthcare provider.
Payer 101 also provides payment to the healthcare provider based upon the EOB. As shown in step 114, for approximately 75% of all claims, payment from the payer to the healthcare provider takes the form of a paper check. In step 116, this paper check must be forwarded on to the healthcare provider's financial institution 104.
In a minority of cases, payment from payer 101 to healthcare provider 102 may take the form of an Automated Clearing House (ACH) transfer 118 of funds to financial institution 104 of the healthcare provider 102. Whether payment is provided to the healthcare provider by paper check or by ACH transfer, in step 120 the financial institution 104 must report to healthcare provider 102, the status of the transactions through a bank statement.
The conventional healthcare payment processing flow shown and described in connection with FIG. 1 is characterized by a high intensity of manual labor. Specifically, conducting financial transactions by paper check (the vast majority of the payment transactions) requires proper handling and routing of paper checks at every stage of the process. Moreover, the healthcare provider is required to manually reconcile the payment amount with the data provided in the EOB and the original Healthcare Claim submitted under HIPAA. Such labor intensive activities drive up the cost of the payment process and of the process for patients to inquire about the status of their healthcare claims, and dispute those claims if appropriate.
In addition, HIPAA mandated changes within the healthcare industry, including the adoption of standardized electronic data interchange (ED) message formats to exchange information, and the utilization of electronic forms of payment. Accordingly, banks, healthcare companies, and third party processing providers have an incentive to bring the healthcare market the degrees of reliability, interoperability, security, and automation that exists in banking and the traditional payments arena.
Therefore, it would be desirable to provide a method and system facilitating the use of payment processing networks in the context of the healthcare industry.